Amid global economic uncertainty and despite the recent terrorism attacks in London, the UK commercial property market remains stable and resilient, maintaining strong values and with no resistance from investors, says Eric Mounier, CE of a company which is a JV between Athanor Offshore Property and Pam Golding Commercial, and which is a South African based company specialising in the sourcing, marketing and management of UK commercial property.

“In addition, England’s successful 2012 Olympic bid is not to be discounted. It will greatly increase London’s profile in the lead up to the event and beyond, and will provide good commercial property investment opportunities for selective buyers over the next two to three years,” says Mounier. “Despite global market fluctuations, the key tenets of UK commercial property remain in place- a low risk environment with solid returns. A relatively high running yield provides protection during times of economic uncertainty and real returns even in a low growth environment. It’s far less volatile than equities or gilts.”

Since January 2005 the JV has facilitated the acquisition of UK commercial properties at a total purchase price of over GBP 30 million. They have a track record of extremely successful commercial property transactions in the UK, with prime located buildings situated in areas such as Wrexham and Newport in Wales, and in Worthing, Sheffield, Colchester, Bury St Edmunds, Basingstoke, Buckinghamshire, London, Kent, Paddington, Exeter, Hartlepool in England. While projected returns over an anticipated five year period are in the region of 10 percent per annum, through sound management and capitalising on market opportunities, they have managed to secure for their investors sound returns ranging from 20 percent per annum up to as high as 50 percent per annum. These returns have been achieved in periods ranging from two to five years.

Says Mounier: “The higher than projected returns achieved in our recent disposals confirms our view that UK commercial property is an important part of any well balanced portfolio. The selective offshore sourcing of properties in strategic locations, in conjunction with our criteria of long, strong rental income, is the key to continued sound returns.”

Against a backdrop of positive returns delivered every year for the past 10 years, Mounier says the UK commercial property market is attracting large scale institutional investment on predictions of strong performance in the medium term. “In the commercial property market income is generated through tenants, which contributes substantially to the total return, particularly when coupled with sound management which can significantly enhance the value of the building. As a result, and in this low risk environment, investors are far less exposed to short term market fluctuations.

“In the year to March 2005, the UK commercial property market has shown strong growth across all sectors. Total investor demand increased by 45 percent to GBP 42.4 billion in 2004 and continues to grow robustly, with first quarter 2005 deals amounting to GBP 12 billion,” says Mounier.

“UK long term interest rates, which have been close to five percent over the past two years, are on a downward trend, and coupled with our strong relationships with mortgage lenders, we are able to secure even more favourable lending terms for our investors. These comprise both local and international investors – from Europe, and increasingly from Southern Africa, as well as other African countries.”

The JV’s latest investment offering is a signature 4000sqm office building situated within Daresbury Park in Cheshire in England’s Northwest, and tenanted by the head office of British Nuclear Fuels Ltd plc – which is wholly owned by the UK government. Daresbury Park will be one of the largest business parks in the UK, strategically located within 15 miles of the international airports of Liverpool and Manchester. This region of the UK boasts some 350 000 companies, including 75 percent of the top 100 UK companies. The high specification building is on a 12000sqm site, and has an effective 15 years remaining on the lease, with five yearly upward only rent reviews. Projected returns, net of costs, are 11 percent per annum, with participation from GBP 25 000.